The Government Co-Contribution
Will the government really put money into your Superannuation?
Yes! It certainly will if you meet all the criteria. This benefit is designed to help lower income earners boost their superannuation balance. The broad concept is that if you invest your own money into your superannuation fund via a non-concessional (after tax) contribution, then the federal government will also make a contribution for you.
The maximum amount that the government will contribute per annum is only $500 but it is still worthwhile, particularly if your superannuation account has a low balance. In a nutshell, if you contribute $1,000 you can receive the extra $500. This could be looked at as an instant 50% return!
The process to be eligible is surprising complex for a small benefit, but it is definitely worthwhile for many people. Some of the key criteria are:
For the full $500 entitlement your income must be below $37,697 in the 2018 to 2019 financial year, and below $38,564 in the 2019 to 2020 financial year.
The entitlement value then phases out up to incomes of $52,697 and $53,564 respectively, at which points the entitlement ceases to be available.
The entitlement is also based on a 50% matching rate, which means that the government will match half of your contributions, with an upper limit of $500 if you contribute $1000 or more. As a further example, if you deposit a non-concessional contribution of $600 into your superannuation account, you would receive a $300 government bonus.
To be eligible, your total super balance must be under $1.6m as at 30th June of the previous financial year.
You cannot have exceeded your non-concessional contribution limit in the same financial year as the extra contribution.
As a basis to determine your eligibility. you must lodge a Tax Return, even if you don’t need to do so for income tax purposes.